May 20 2013 Latest news:
Wednesday, February 13, 2013
FIRST-time buyers hoping to get on the housing ladder in East Anglia now have to save up for seven years just to pay a deposit according to new figures from the Home Builders’ Federation.
SUFFOLK couple Kieran Donovan and his fiancee Lizzie Spillane have moved in with his mother in Tattingstone in an attempt to save enough money for a deposit on their first home.
Mr Donovan said the couple had been unable to save enough money while paying rent on a home in the town, so had decided to move back to the family home.
He said: “I work for an online company and my partner works for AXA, so we are in good jobs earning reasonable salaries but it was impossible to save enough to raise a deposit.
“I’m 28 and Lizzie is 26 today – we want to buy our own home but it is not possible at this time.”
Mr Donovan said they were both local people who wanted to live near their family and friends.
“We want to live in this area, ideally on the (Shotley) peninsula. Hopefully we will be able to raise enough eventually – but it is a real struggle.”
This has led to a 64% fall in the number of first-time buyers according to the latest report from the HBF.
It has forced couples like Keiran Donovan and Lizzie Spillane to move in with his mother in an attempt to save enough money for their deposit.
The HBF’s “Broken Ladder” report dubs those struggling to raise a deposit “The Lost Generation.”
With the average price of starter homes in the East of England £172,000 and average deposits required at 20%, the HBF says someone in their 20s on an average salary of £25,000 would need to save 33% of their net salary for 83 months to build up a £34,400 deposit to put down on their first home.
The HBF says government schemes like NewBuy, which offers mortgages of up to 95%, have helped – but there is not enough funding behind them and they are only able to help a minority of first-time buyers.
The Council of Mortgage Lenders said 216,000 people took their first step on the housing ladder last year – the highest figure for five years.
However between 1997 and 2002 the average number of first-time buyers was 543,000.
The figure for the East of England covers the whole region from the south of Essex and home counties like Hertfordshire to North Norfolk.
House prices vary across the area – according to figures from the Land Registry in December, terraced houses in Ipswich averaged at just under £125,000 while terraces in St Edmundsbury averaged £175,000. The average for terraces across the county was £151,000.
Flats in Ipswich averaged £108,500 while those in St Edmundsbury averaged at £143,000. The average for flats across the county was £127,000.
Stewart Baseley, HBF Executive Chairman, said today: “This report reveals the extent of our housing crisis and the challenge faced by today’s young people.
“Unlike previous generations that took home ownership for granted, today’s generation have a mountain to climb if they wish to own their own home. We are creating a locked out generation.”
Ipswich Building Society does offer 90% mortgages – and 95% mortgages to some existing savers.
Its chief executive Paul Winter said there had been a change in the demographics of first-time buyers over recent years.
He said: “We are now finding that the average age of first-time buyers is about 32. People are renting in their 20s as they want to remain more flexible and move from job to job before settling down – they are not trying to buy a home in their early to mid 20s as happened 20 years ago.
“That’s probably not a bad thing, it does give more flexibility during the early years of work and people look to buy their first home when they’re settling down with a family.”
Mr Winter said his society also offered mortgages to as part of shared equity schemes – where first-time buyers owned part of a property and rented the rest.
“That is particularly useful in an area like Ipswich where incomes are not as high as they are in some other places,” Mr Winter said.